Copper continues its strong showing

Spot prices for copper recently set new highs on both the London Metal Exchange and New York Commodity Exchange, and many people are wondering if the bull run still has some steam to let out.

In both cases the price topped $1.50(US) per lb. Also, at least one supplier in the United States, Asarco, was reporting a producer price of $1.58.

Not that the price stayed above the $1.50 mark for a great length of time; corrections have seen it drop 10-15 . However, for a variety of reasons, not the least of which is the low level of inventories, a few analysts see the price hanging on and perhaps even heading higher.

First Marathon Securities of Toronto, for instance, in a recent Metals & Mining Digest edition, reports global copper stocks at unusually low levels, with producer and exchange inventories standing at slightly more than 50% of normal working inventories. “These inventories now are equivalent to slightly more than three weeks of consumption, which is lower than any number recorded in the last 35 years,” writes the investment firm.

A nationwide miners’ strike in Peru, a significant producer of copper and other metals, that got under way in mid-October is reported to be having a disruptive effect on supplies. Feeling the pinch

According to First Marathon, the U.S. appears to be feeling the pinch of lower inventories more than other nations. And the December Comex contract, it is pointed out, has drawn a considerable amount of interest.

“With the availability of physical metal so tight, it seems inevitable holders of a substantial number of Comex contracts could call for delivery of metal,” writes the company. “The possibility of a squeeze is increasing. Higher spot prices seem inevitable in a highly volatile market.”

Barclays de Zoete Wedd of London observes that the Peruvian strike and current demand “should underpin the price.” The company points out that demand for the base metal is usually stronger during this part of the year.

Reporting production difficulties in Zaire and Zambia and output forecast reductions for this year and 1989 by Codelco of Chile is Shearson Lehman Hutton of New York. The international investment dealer also says two new large mines, Neves Corvo in Portugal and Olympic Dam in Australia, were recently commissioned and some smaller projects have received the green light for production.

“These provide confirmation of our view that in most of the world copper will rise enormously next year,” writes Shearson. “The point, though, is that the new output is not here yet, and it will not have a sufficient impact for several months given the persistent firm demand for copper.”

Prices in the uranium industry have never been as high as they were during the latter part of the 1970s, when exchange values topped $43(US) per lb U3O8.

Above $16 in January of this year, the metal’s value slipped during the ensuing months and in October was sitting at $13.15. The Uranium Exchange Co. of Connecticut recently reported differing opinions by U.S. utilities and producers on whether the spot market price may have bottomed.

“Many attribute the current weakness to year-end selling by producers, there by signalling a firmer market by the beginning of the year. Others, meanwhile, expect spot prices to continue to fall since they see no reason for the current trend to change. This is leading some to think prices will fall under $10 per lb and many to expect prices to remain depressed for an extended period,” writes the exchange.

Sales of lithium batteries in Europe will double in the 1987-93 period, predicts a report by Frost & Sullivan of London. In Europe alone, it is estimated the market by 1993 will be worth $104.4 million.

The research firm writes that safe designs have been developed or have had features added to stop problems such as pressure build-up in the cell. “After initially withholding lithium batteries from retail outlets, many manufacturers, especially Duracell, Kodak and the Japanese, are now vigorously attacking the consumer market with products mainly destined for photographic, clock and watch applications,” the study says.

Frost & Sullivan says that although the small batteries replacing nickel cadmium or other cells in watches and cameras might be the most obvious inroads being made, far and away the dominant application is in memory back-ups for machines that would lose data if power was interrupted, such as cash registers, address printers and copying machines.

Second largest use for lithium batteries is supplying power for weapons systems; shelf life (up to 10 years) and high power-to-weight and power-to-volume ratios add to their advantage. In missiles, for example, they are replacing silver- zinc cells which are changed annually.